Bank Rules: If the person taking the loan does not repay the loan for any reason, then the bank recovers the loan amount by auctioning that house or property. There is a complete process of confiscating the property.
House is the biggest investment in life for everyone. Every person invests a lot of money to prepare his dream house. It is a bit difficult to raise so much money at once. Therefore, every person takes a loan from the bank to build or buy a house. While taking a home loan, you have to mortgage a property as security.
If the person taking the loan does not repay the loan for any reason, then the bank recovers the loan amount by auctioning that house or property. There is a complete process of confiscating the property. If such a situation arises in life, then it is important that you know about your rights (Bank Rules) regarding property auction.
When and why does the bank seize the property?
The loan taken from the bank for a house or any other property has to be repaid on time. If you do not pay the installment of home loan or any other loan, the bank recovers its amount by seizing your property. However, it is not that if you do not pay the loan installment, the bank will immediately take possession of your house and auction it. In case of non-payment of loan, the bank gives many opportunities to the person taking the loan. Only auction is the last option. But even if due to some reason the property gets auctioned, the person taking the loan still has many options.
If a person does not pay the loan EMI for 2 consecutive months, then the bank sends him a reminder i.e. reminds him about this. Even after this, when the third installment is not deposited, a legal notice is sent to the customer. However, if the EMI is not paid then the bank declares the property as NPA and the person taking the loan is declared a defaulter.
Rules related to auction-
However, it is not that your property will be auctioned after being declared NPA. Because in this also there are 3 categories – Substandard Assets, Doubtful Assets and Loss Assets. In case of non-payment of EMI, firstly the loan account remains in the category of substandard assets account for 1 year, after that it becomes doubtful assets and when there is no hope of loan recovery then it is considered as ‘lost assets’. Remember, the property is auctioned only after it becomes a loss asset. The bank issues public notice for the auction.
Some rights you get during auction-
Before the sale of the asset, the bank or the financial institution from where you have taken the loan has to issue a notice stating the fair value of the asset. In this, the reserve price, date and time of the auction also need to be mentioned. If the borrower feels that the asset has been underpriced, he can challenge the auction.
If you are unable to stop the auction of the asset, then keep an eye on the auction process as you have the right to get the additional amount left after recovery of the loan. The bank has to return the remaining amount to the creditor.
